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The government has prohibited state-owned enterprises (SOEs) from seeking new bank loans. Instead, they are required to find alternative financing, such as securitization and bonds.

Finance Minister Sri Mulyani Indrawati said her ministry would start monitoring SOEs' financial conditions, though she added they were still controllable.

The new policy was aimed at avoiding negative sentiment in the financial market amid global pressure as well as to prevent SOE debts from swelling, she added.

“SOEs will use alternative financing, such as securitization and the issuance of Komodo bonds, or cooperate with third parties,” Sri Mulyani said, as reported by kontan.co.id on Wednesday.

With regard to SOEs that had infrastructure projects, the government would closely look into their cashflows, because they needed to carry out land acquisition, she added.

“We will coordinate with the SOE Ministry, so that payments from the State Asset Management Institution (LMAN) could be on time to assure that the SOEs avoid cashflow pressure,” she added.

According to an analysis of non-bank SOEs through a macro stress-test model in the 2018 state budget financial notes, several developments could lead to ballooning company debt, including increasing global oil prices and sharp rupiah depreciation.

Under the model, if the oil price increases by US$20 per barrel from the state budget assumption, which was at $45 per barrel, the net debt could swell by 7.19 percent. Meanwhile, if the rupiah exchange rate weakens by 20 percent, the debt would increase by 2.57 percent. (bbn)